In 2015, American employers added 2.65 million jobs, the second best year of jobs gains since 1999, according to a recent employment data report.
In December alone, 292,000 jobs were thrown into the mix. Earlier in the year, analysts had predicted the economy would add 200,000, so the actual numbers proved to power out expectations. To further improve the economic outlook, the unemployment rate hovered at 5 percent for the third month in a row, which is what most economists consider “full employment.”
For the real estate industry, this means further strengthening of the housing market.
“Job creation is the most important leading indicator of steady demand for housing,” says realtor.com Chief Economist Jonathan Smoke. “The healthy employment results for the last two years have created an uptick in household formation, which drives demand for home purchases and rentals. We now have had three strong months above 250,000, reflecting a true return back to a strong growth trend. Our positive forecast for 2016 assumed growth of 208,333 per month.”
These solid numbers show that at 5 percent, unemployment is down by half from its peak of 10 percent in 2009. In December, wages were 2.5 percent higher than they were a year ago.
“However, global concerns and related stock market declines have not started the year on a good note,” says Smoke. “If we do not see a strong rebound in financial markets, consumer confidence is likely to be impacted in the near term. But if we continue to see robust job creation, confidence should recover just in time for the spring, when home sales traditionally jump. The upside to the recent financial market weakness is that consumers received yet another reprieve from higher mortgage rates. The average fixed 30-year is now back under 4 percent. Such low rates likely won’t last, as it was the labor market that influenced the Fed to raise rates in December, and today’s report just increased the odds for another move in March.”
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